Conn. Station Operators Sue Alliance Energy

Claim distributor forcing them to pay "unreasonable" prices

June 10, 2011

HARTFORD, Conn. -- One of the largest gasoline distributors in the Northeast is being sued by Connecticut gas station operators, who allege the company is forcing them and others to pay "unreasonable" prices for gasoline and is playing a major role in the state having some of the highest gasoline prices in the country.

The station operators are seeking an undetermined amount of damages and a court order mandating fair pricing of gasoline products, among other actions, while Alliance's owners are pledging to fight what they call unfounded accusations.

The operators run some of the 88 gas stations in Connecticut that Alliance Energy acquired from ExxonMobil in February. They allege that when Alliance took over, the company began charging them 17 cents to 22 cents more per gallon of gas than what they were paying Exxon Mobil and imposed numerous other conditions that they say have hindered their ability to compete. Their lawyer believes Alliance is forcing similar conditions upon all its other stations in the state, the report said.

"In mid-May, one of my clients complained that there was a 39-cent differential between what he was paying [for gasoline] and what a competing station was able to charge," Richard Weinstein, a lawyer representing the plaintiffs, told AP. "They've all incurred substantial price increases since Alliance took them over, and the dealers have passed those price increases on to consumers."

The average price for a gallon of regular gasoline in Connecticut on Thursday was $4.04, the fourth-highest price in the country after Alaska, Illinois and Hawaii, according to AAA's daily survey of more than 100,000 self-serve stations. Local, state and federal taxes on gasoline in Connecticut totals about 70 cents per gallon, the highest amount in the country, according to the American Petroleum Institute (API).

Alliance Energy, whose website says it distributes gasoline and diesel for major oil companies to about 500 stations in New England, New York and Pennsylvania, is owned mostly by the Slifka family of Massachusetts and also has the contracts to provide fuel and operate convenience stores at all of Connecticut's highway service plazas. Besides Exxon and Mobil, the company distributes gasoline for Sunoco, Shell, CITGO and Gulf stations as well as unbranded fuel for Global stations.

The Slifkas also own Global Partners LP, another large gas distributor based in Waltham that owns and supplies fuel to about 190 Mobil gas stations in New England and distributes Mobil gasoline to another 30 independently owned stations. Global Partners' website says it "owns, controls or has access to" one of the largest terminal networks of refined petroleum products in the Northeast.

Richard Slifka, whose family owns both companies and is vice chairman of Global's board of directors, declined to comment specifically to the news agency on the lawsuit's allegations on Thursday, but he said Alliance will fight the claims.

"We believe that it's really without merit," Slifka told AP.

Weinstein said one of his concerns is the scope of Alliance and Global Partners' influence on gasoline pricing, given the large number of stations owned by the companies in the region. He said he was notsure how big the companies' influence is, but suspects it's substantial. The Connecticut lawsuit appears to be the first of its kind against Alliance, said AP.

Syed Bokhari, 47, who operates 11 Mobil stations and another half dozen other brand stations in Connecticut and Massachusetts, said he and other operators are struggling to make ends meet because of the prices being charged by Alliance Energy. Bokhari is one of the plaintiffs in the lawsuit.

Bokhari said his gasoline sales fell 50% since Alliance took over. As an example, he said his Mobil station in Farmington used to sell 120,000 gallons a month but has notsold more than 60,000 gallons a month since Alliance acquired the station.

Fellow Mobil station operator and plaintiff Jaafar Kafel said he has been selling gasoline in Newington for less than what he pays for it just to compete for consumers' dollars against other local stations.

"My cost today is $3.84 and everybody is selling for $3.82," Kafeltold APabout prices per gallon. "How can I compete and survive? We are going under water with this."
The plaintiffs also claim the Exxon Mobil-Alliance deal violated the state's Petroleum Products Franchise Act because the station operators were notoffered good-faith proposals to buy the properties before they were acquired by Alliance.

The lawsuit also names the Stamford, Conn.-based Gasoline& Automotive Service Dealers of America, accusing it of playing a role in the Alliance acquisition deal and favoring the company when it was supposed to be representing station operators.

Michael Fox, executive director of the dealers group, denied the lawsuit's allegations andtold AP thathe was frustrated he was being sued by the people he represents. He said he has been fighting for years to get laws passed that prevent the kind of conduct alleged in the complaint.

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